On Thursday, markets plunged into the red after the United States raised the tariffs it had already imposed on $200 billion worth of Chinese goods, from 10% to 25%. According to United States Trade Representative Robert Lighthizer, the move was made “to encourage China to change its harmful policies and behavior and adopt policies that will lead to fairer markets and prosperity for all of our citizens.”
China, however, has no plans of backing down.
“China is fully prepared and will have to retaliate to defend the nation’s dignity and the interests of the people, defend free trade and the multilateral system, and defend the common interests of all countries,” reads a statement on China’s Ministry of Commerce website. China is expected to retaliate severely.
The tense situation has created downward movement in markets – even the Nasdaq, which had enjoyed a brief rally after Apple (Nasdaq: AAPL) posted its best-ever third quarter. Apple’s strong results were a welcome relief after the disastrous earnings call of fellow tech giant Facebook (Nasdaq: FB) caused the Nasdaq to slide nearly 4 percentage points in the matter of a few days.
But as economic tensions between the U.S. and China veer towards brinksmanship, the markets are proving that a trade war is bigger than any tech giant — even if it’s on the verge of a trillion-dollar market cap.